The announcement that Paul Zahra will be stepping down as CEO of David Jones and the knowledge that his opposite number across the mall at Myer, Bernie Brookes, will not be renewing his contract opened up huge speculation as to, if not who it will be, then what backgrounds their replacements may have.
Let me start by saying that the last five years in global retailing has been, to use a soccer phrase, “a tale of two halves”. Every retailer in the world went into the GFC just on the tipping point of the explosion of global online retailing. Added to this, global currency moves made retail prices easier to compare, and sourcing decisions more important.
Many global suppliers to retailers, as the GFC cash and jobs tide went out and shoppers began to care about prices, were found to have been padding their Speedos. It was very difficult to explain to the buying office why the same factory in China generated the same product but it cost twice as much in one country, and in those stores and websites, than in another. Many retailers just went under. Circuit City in the US, Woolworths in the UK.
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Those retailers who had spent the previous decade building direct sourcing supply chains for their own products under their own brands, were much better placed than those buying from branded suppliers. Those retailers that had made a significant investment over the previous decade in learning about, or buying, online retailers, were also better placed. But if you had few own retail brands, bought predominantly international brands, and sold only through your own stores, the ability to pay to play catch up, when sales through the tills were falling, was seriously tough.
And this had nothing to do with the retail channels they operated in, or products they sold. In the UK, John Lewis Partnership grew because of its well-developed own brand and online capabilities. In the US, Walmart for the same reason did too. In Australia it was Super Retail Group, JB Hi-Fi and Kathmandu that were best prepared. Coles accelerated out of its decade of self-imposed doldrums to embrace and build a deep and wide own brand portfolio and also build online capability, if not scale, very quickly.
So back to Paul and Bernie. I am aware of many armchair pundits who have damning views on how they have both performed. However, with all due respect, I am not convinced that any of those observers could have delivered a better outcome over the same period. A tough gig that has worn Paul and Bernie out physically and emotionally.
So what type of person is going to take on the challenge of leading our two luxury department store retailers into the future?
In the US earlier this month Apple announced that a newly created role of “Senior Vice President of Retail and Online Stores” will be filled by an executive with a background in fashion retailing. The new role will be responsible for all of Apple’s retail sales; its own Apple stores, the re-seller network and the Apple online channel. A first for Apple to treat all touch points with the shopper as common.
Angela Ahrendts is currently CEO of Burberry, and worked previously with other fashion icons Liz Claiborne and Donna Karan. Not Samsung or HP or Microsoft. Not a technology and products focused background, but one focused on providing retail service and quality in a fast changing product lifecycle. And in her new role she will have responsibility for every shopper’s experience, whether in an Apple owned store, an Apple supported reseller’s store or any of the www.apple.something websites around the world. What an amazing role.
I don’t know who is going to be the next CEO of Myer or DJs. But I hope the board has briefed the search firms to think innovatively about the backgrounds of each of the candidates they bring to the board. They may not be a traditional department store retailer.
Kevin Moore is the chairman of Crossmark Asia Pacific Holdings.